legal compliance
Affiliate Agreement
The contract that governs how you promote, what you earn, and when commissions can be reversed.
What is Affiliate Agreement?
An affiliate agreement is the legal contract between a merchant and an affiliate that defines the commission structure, promotion restrictions, attribution rules, reversal conditions, payment terms, and termination rights governing the affiliate relationship.
Importance of Affiliate Agreement
The affiliate agreement is the document that determines what you can actually earn — and under what conditions you can lose it. Commission rates are marketing. The affiliate agreement is the legal reality. An affiliate who promotes a program without reading its agreement may unknowingly violate promotion restrictions (running paid ads on prohibited keywords, using unapproved discount codes), earn commissions that are later reversed on grounds buried in the reversal clause, or discover that the program has termination rights that allow immediate account closure without commission payment. Reading the affiliate agreement before promoting is not optional due diligence — it is the minimum standard of professional affiliate management.
Affiliate Agreement In Practice
Most affiliate agreements cover the same core areas, though the specific terms vary significantly between programs. Commission terms: the rate, what triggers payment (first sale only or recurring), and whether rates can be changed with notice. Promotion restrictions: what channels are permitted, whether brand bidding in PPC is allowed, whether coupon or cashback sites can join, and what content types are prohibited. Attribution and reversal policy: the cookie window, the attribution model, the hold period before commissions pay, and the specific conditions under which commissions can be reversed. Payment terms: the threshold, payment schedule, currency, and method. Termination rights: whether the program can terminate your account immediately and whether unpaid commissions are forfeited on termination. The most consequential clauses to read before promoting any program are the reversal clause (what percentage of your commissions can be taken back and under what circumstances) and the promotion restrictions clause (whether your planned promotional method is explicitly permitted). Violating promotion restrictions is the most common reason affiliate accounts are terminated and commissions forfeited.
Affiliate Agreement Best Practices
- →Read the affiliate agreement before promoting — specifically the reversal clause, promotion restrictions, and termination terms — not just the commission rate on the program's landing page.
- →Note which promotion channels are explicitly permitted and which are prohibited — many programs prohibit PPC on branded keywords, coupon sites, or email-only promotion without prior approval.
- →Save a copy of the affiliate agreement when you join — programs sometimes update terms, and having the version you agreed to protects you if disputes arise over retroactive policy changes.
- →If a planned promotional method is not explicitly addressed in the agreement, ask the affiliate manager for written confirmation before proceeding — 'not mentioned' does not mean 'permitted.'
- →Pay attention to termination and commission forfeiture clauses — some programs reserve the right to terminate accounts and forfeit unpaid commissions at their discretion, a significant financial risk for affiliates who have built up large balances.
Example of Affiliate Agreement
An affiliate joins a SaaS program and builds a PPC campaign targeting the merchant's branded keywords, driving high-converting traffic. Three months later, the affiliate manager reviews the account, finds branded keyword violations, terminates the account, and reverses all earned commissions under the agreement's violation clause — which the affiliate never read. The promotion restrictions section of the affiliate agreement, which the affiliate clicked through without reading, explicitly prohibited PPC advertising on the merchant's brand name. The affiliate receives nothing from three months of campaign spend and traffic. The same outcome would have been avoidable by reading the affiliate agreement's promotion restrictions before launching the campaign.
Related Terms
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Frequently Asked Questions
What is an affiliate agreement?
An affiliate agreement is the legal contract between a merchant and an affiliate that governs the promotional relationship. It defines the commission structure, which promotion channels are permitted, how attribution works, under what conditions commissions can be reversed, when and how payments are made, and the terms under which either party can terminate the relationship. It is the legally binding document that supersedes any verbal promises or marketing materials about the program.
What should I look for in an affiliate agreement before joining a program?
Prioritise four sections: promotion restrictions (what channels are permitted — paid search, email, coupon sites — and what is explicitly prohibited), reversal clause (what percentage of commissions can be reversed and under what conditions), payment terms (threshold, schedule, and method), and termination rights (whether unpaid commissions are forfeited on termination). The commission rate is important but is already advertised on the program's public page. The clauses listed above are where programs differ most significantly in their affiliate-friendliness.
Can a merchant change the terms of an affiliate agreement?
Yes, and most agreements reserve this right. Programs typically require a notice period — commonly 30 days — before materially changed terms take effect. Changes that most commonly affect affiliates include commission rate reductions, changes to cookie duration, and additions to the prohibited promotion list. When you receive a terms update notification from a program, review the changes carefully — if the new terms make the program uneconomical to promote, you can stop before the changes take effect rather than continuing under less favourable conditions.